Something Sweet, LLC v. Nick-N-Willy's Franchise Co.
Something Sweet, LLC v. Nick-N-Willy's Franchise Co.
Opinion of the Court
¶1 Kirk and Jill Brandenburg, owners of a Nick-N-Willy’s pizza store franchise, sued Nick-N-Willy’s
FACTS
¶2 Nick-N-Willy’s Franchise Company LLC sells two types of franchises. The first type is for operating Nick-N-Willy’s pizza stores, which includes two basic models. The “outlet” model sells only “take-and-bake pizzas,” which are preassembled but unbaked pizzas. Customers are expected to take these pizzas home and use their own ovens to bake them. The “restaurant” model sells both take-and-bake pizzas and prepared pizzas that customers can eat at the store.
¶3 The second type of franchise is for “area development marketing.” An area development marketing franchisee buys the right to solicit and recruit potential Nick-N-Willy’s store franchisees in a given geographic region. The area developer is also required to provide support services to Nick-N-Willy’s store franchisees in the specified area.
¶4 Michael Moore bought an area development marketing franchise covering King County in July 2005.
¶5 In August 2008, the Brandenburgs sued Nick-N-Willy’s and the Moores for rescission and damages under the Franchise Investment Protection Act (FIPA). They alleged Nick-N-Willy’s failed to disclose that it was planning to discontinue the outlet store model at the time they purchased the franchise. They also claimed the Moores were subfranchisors and violated the act by failing to register a franchise offering. Nick-N-Willy’s and the Moores moved for summary judgment, arguing that Nick-N-Willy’s did not abandon its take-and-bake only stores, the Moores were not subfranchisors, and the Moores were not required to register. The superior court dismissed the Brandenburgs’ claims and denied their motion for reconsideration. They sought direct review in our Supreme Court, which transferred the case to this court.
Material Omission
¶6 The Brandenburgs argue that the trial court improperly dismissed their material omission claim on summary judgment because Nick-N-Willy’s presented no evidence to disprove their allegation that it was planning to discontinue the outlet model at the time they purchased their franchise. This court reviews a summary judgment order de novo, engaging in the same inquiry as the trial court. Simpson Tacoma Kraft Co. v. Dep’t of Ecology, 119 Wn.2d 640, 646, 835 P.2d 1030 (1992). Summary judgment is proper when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Huff v. Budbill, 141 Wn.2d 1, 7, 1 P.3d 1138 (2000). The court must construe facts and reasonable inferences from those facts in the light most favorable to the nonmoving party. Michak v. Transnation Title Ins. Co., 148 Wn.2d 788, 795, 64 P.3d 22 (2003). However, the nonmoving party may not rely on mere allegations, denials, opinions, or conclusory statements, but must set forth specific facts to show there is a genuine issue for trial. Int’l Ultimate, Inc. v. St. Paul Fire & Marine Ins. Co., 122 Wn. App. 736, 744, 87 P.3d 774 (2004).
¶7 The legislature enacted FIPA to curtail franchisor sales abuses and unfair competitive practices. E. Wind Express, Inc. v. Airborne Freight Corp., 95 Wn. App. 98, 102, 974 P.2d 369 (1999). To prevent these practices, FIPA generally requires franchise offers to be registered with the state and material information be disclosed to prospective franchisees. Corp v. Atl.-Richfield Co., 122 Wn.2d 574, 579-80, 860 P.2d 1015 (1993). The information disclosed must be accurate and cannot omit material facts.
It is unlawful for any person in connection with the offer, sale, or purchase of any franchise or subfranchise in this state directly or indirectly:
*823 (2) To sell or offer to sell by means of any written or oral communication which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made in light of the circumstances under which they were made not misleading.
RCW 19.100.170.
¶8 In Morris v. International Yogurt Co., 107 Wn.2d 314, 729 P.2d 33 (1986), our Supreme Court addressed when a fact would be considered material under FIPA. It noted that the language in RCW 19.100.170(2) is essentially the same as the antifraud language in The Securities Act of Washington, RCW 21.20.010(2). Morris, 107 Wn.2d at 322-23. Based on cases interpreting that provision, the court held that a fact would qualify as material under FIPA if a reasonable person would consider it important in determining what action to take with respect to the transaction in question. Morris, 107 Wn.2d at 323. In Morris, the franchisor failed to disclose that its unique yogurt mix was available to nonfranchisees. Morris, 107 Wn.2d at 316. To determine whether a reasonable person would consider this fact important, the court looked to the franchise agreement, which repeatedly emphasized that by purchasing the franchise, the franchisee would acquire the right to purchase the unique yogurt mix. Morris, 107 Wn.2d at 324. The court noted that the franchise agreement described the yogurt mix as a trade secret and concluded, “[T]he agreement clearly indicates that the right to purchase this one-of-a-kind yogurt mix is a key feature of the franchise.” Morris, 107 Wn.2d at 324. Because the availability of the yogurt mix to nonfranchisees would make the franchise far less valuable, the court determined that it was a material fact, which should have been disclosed. Morris, 107 Wn.2d at 326-27.
¶9 Here, the Brandenburgs allege that Nick-N-Willy’s was planning to discontinue its outlet franchises at the time they purchased their franchise and that its failure to disclose this fact was a material omission. But Nick-N-Willy’s presented evidence in support of its summary judgment motion
¶10 The Brandenburgs claim the materiality of such a plan would be “self-evident” to any prospective franchise purchaser. Br. of Appellants at 2. But it is undisputed that Nick-N-Willy’s disclosed to the Brandenburgs in May 2006 through its offering circular and the franchise agreement that such a shift might occur if Nick-N-Willy’s decided to change its store operating methods in the future. This situation differs substantially from Morris, where the ability to purchase the unique yogurt mix was a key feature of the franchise agreement. Here, the nationwide mixture of
Registration
¶11 The Brandenburgs also argue that the Moores were subfranchisors as defined by FIPA and, as such, they were required to register a franchise offering with the state. The Moores argue that they were not subfranchisors and that even if they were, FIPA did not require them to register because Nick-N-Willy’s had already registered its franchise offering. Because we agree with the Moores that FIPA does not require dual registration by franchisors and subfranchisors, we do not reach the issue of whether the Moores were subfranchisors.
¶12 Statutory interpretation is a question of law, reviewed de novo. Thompson v. Hanson, 168 Wn.2d 738, 744, 239 P.3d 537 (2009). When interpreting a statute, the court first looks to its plain language. State v. Armendariz, 160 Wn.2d 106, 110, 156 P.3d 201 (2007). “If a statute is clear on its face, its meaning is to be derived from the language of the statute alone.” Kilian v. Atkinson, 147 Wn.2d 16, 20, 50 P.3d 638 (2002).
¶13 FIPA provides, “It is unlawful for any franchisor or subfranchisor to sell or offer to sell any franchise in this
¶14 Here, it is undisputed that Nick-N-Willy’s properly registered its franchise offering according to FIPA’s requirements and that a copy of its offering circular and proposed franchise agreement were delivered to the Brandenburgs more than 10 business days before they purchased the franchise.
¶15 Consequently, we affirm the trial court’s summary judgment dismissal of the Brandenburgs’ claims.
Review denied at 170 Wn.2d 1021 (2011).
Although Moore alone signed the agreement, his mother, Patti Moore, acted as his business partner.
Shortly after this, Nick-N-Willy’s chief executive officer, Richard Weil, sent a letter to the Brandenburgs expressing concern about their proposed site. The letter stated, “The Franchisor would not normally approve this Proposed Site due to the following concerns: competitive landscape, the prohibition on any cooked pizza and the overall location within the shopping center. However, given your strong desire to build a store in this Proposed Site and your personal belief in the success of this location, the Franchisor is willing to permit the lease process to proceed . . . .”
The Brandenburgs claim that Nick-N-Willy’s no longer provides meaningful marketing for take-and-bake only stores, but it fails to support this conclusory assertion with evidence in the record. In contrast, Nick-N-Willy’s provided evidence that all Nick-N-Willy’s stores — restaurant and outlet — continue to offer take-and-bake pizzas and that they remain an integral part of its business. Additionally, the Moores presented evidence that Nick-N-Willy’s promoted both its unbaked and baked products throughout their experience with the company. Finally, while the Brandenburgs claim Nick-N-Willy’s touted its outlet model when they decided to purchase a franchise, the only evidence they cite is an article from Pizza Marketing Quarterly featuring a Nick-N-Willy’s store following the restaurant model.
Neither party contends any of the exemptions listed in RCW 19.100.030 apply here.
The record indicates the Brandenburgs received these documents several months before they purchased the Nick-N-Willy’s store franchise and they used that time to obtain independent legal advice before signing the franchise agreement.
The Brandenburgs do cite a 1991 interpretative statement by the director of financial institutions that appears to support their dual registration argument. But this statement was issued before major revisions to FIPA later that year. See S.B. 5256,52nd Leg., Reg. Sess. (Wash. 1991). In any event, we adhere to the plain language of a statute over an agency’s interpretative statements. See Cerrillo v. Esparza, 158 Wn.2d 194, 201-02, 142 P.3d 155 (2006) (where a statute is unambiguous, it is error to rely instead on the interpretative opinions of an administrative agency).
Case-law data current through December 31, 2025. Source: CourtListener bulk data.